As of 12:01 AM Eastern on November 10, the fentanyl IEEPA tariff dropped from 20% to 10%, the reciprocal IEEPA tariff stayed at 10%, and China pulled its 10% to 15% retaliatory tariffs on US agricultural products. Your Chinese suppliers got the same news you did. They’re already recalculating their quote sheets. If you don’t sit down with yours this week and run the FOB and CIF maths line by line, your supplier will quietly retain half the tariff relief as a price adjustment, and you’ll never see it on your landed cost sheet.
This is the workbook. One cargo at a time, one HTSUS code at a time. Bring your last three purchase orders, your broker’s entry summaries, and 90 minutes.
What Actually Changed on the Tariff Stack
Penn Wharton’s post-Busan modelling puts the effective US tariff rate on mainland Chinese goods at roughly 34.7%, down from roughly 47% pre-Busan. That 12-point swing is the number your CFO wants to see flow through into Q1 2026 COGS. The question isn’t whether it’s real. It is. The question is how much of it your supplier keeps versus how much lands on your P&L.
The components:
| Layer | Before Nov 10 | From Nov 10 | Notes |
|---|---|---|---|
| IEEPA fentanyl | 20% | 10% | 12-month duration |
| IEEPA reciprocal | 10% | 10% | Extended to Nov 10, 2026 |
| Section 301 (list dependent) | 7.5% to 25% | 7.5% to 25% | Unchanged |
| MPF / HMF | Standard | Standard | Unchanged |
| China retaliatory on US ag | 10% to 15% | 0% | Removed |
| Penn Wharton effective rate (Chinese imports) | ~47% | ~34.7% | Weighted average across HTSUS |
The savings do not show up automatically. Your supplier’s quote desk in Yantai or Ningbo woke up on November 10 with the same spreadsheet you did and ran the same sensitivity: how much of this 10 percentage point IEEPA relief can we retain as a FOB price adjustment before the customer pushes back? The honest answer in most commercial relationships is 20% to 40% of the delta, unless you show up with the numbers and pressure the split back your way.
Step 1: Build Your Pre-Busan Baseline Per SKU
Don’t try to do this across your whole book at once. Pick your top five SKUs by annual spend and work through them individually. For each, pull:
- The last fully invoiced cargo’s FOB port-of-loading price, denominated in USD per MT
- Ocean freight rate actually paid (not the FAK card rate, the rate on the actual Bill of Lading)
- Marine insurance premium as a percentage of CIF value
- Broker’s HTSUS classification and Section 301 list assignment
- Entry summary showing duty paid, MPF and HMF
You want the actual delivered, duty-paid cost per MT into your Houston, Los Angeles, Long Beach or Savannah tank farm or warehouse. Not the estimate. The actual.
Step 2: Worked Example on MDI, FOB Ningbo to Houston
Let’s run a typical 20 MT isotank of polymeric MDI from Wanhua Yantai via Ningbo-Zhoushan to Houston. This is HTSUS 3909.31, which sits in Section 301 List 3 at 25%.
Pre-Busan CIF Houston landed cost, per MT:
- FOB Ningbo: $2,850
- Ocean freight allocation: $185
- Marine insurance (0.35% of CIF): $11
- CIF Houston: $3,046
- IEEPA fentanyl (20%): $609.20
- IEEPA reciprocal (10%): $304.60
- Section 301 List 3 (25%): $761.50
- MPF (0.3464%): $10.55
- HMF (0.125%): $3.81
- Customs brokerage and ISF allocation: $18
- Trucking to Houston tank farm: $95
- Pre-Busan landed cost per MT: $4,848.66
- Per 20 MT isotank: $96,973
Post-Busan CIF Houston landed cost, per MT, holding FOB constant:
- FOB Ningbo: $2,850
- Ocean freight: $185
- Marine insurance: $11
- CIF Houston: $3,046
- IEEPA fentanyl (10%): $304.60
- IEEPA reciprocal (10%): $304.60
- Section 301 List 3 (25%): $761.50
- MPF + HMF + brokerage + trucking: $127.36
- Post-Busan landed cost per MT: $4,544.06
- Per 20 MT isotank: $90,881
Delta: $304.60 per MT, or $6,092 per 20 MT isotank. That’s 6.3% off the pre-Busan landed cost. On 600 MT of annual MDI volume, that’s roughly $183,000 per year. Real money.
Step 3: Expect the FOB Pushback. Here’s the Counter
Your Wanhua account manager is going to come back with one of three moves. Know them in advance.
Move 1: A modest FOB increase, framed as “market rebalancing.” Expect $30 to $60 per MT, which on MDI pulls back roughly 10% to 20% of your tariff gain. Counter: ask for the cost build-up. If feedstock MDI precursors (aniline, formaldehyde) haven’t moved more than 2% on the PVC or TDI benchmark curves, the FOB move isn’t a cost pass-through, it’s margin capture.
Move 2: A shift to different Incoterms. “Let’s move to CIF or DAP and I’ll quote you a bundled rate.” This is the oldest play in the book and it always favours the supplier because they bury freight and insurance in an opaque line. Stay on FOB. You want visibility on every component.
Move 3: A volume commitment ask. “Lock 1,200 MT for 2026 and I’ll hold the FOB.” This one can actually work for you, but only if the locked FOB sits at pre-Busan minus at least 1% to 2% and the contract has a quarterly benchmark reset clause tied to published precursor indices. Don’t sign a flat 12-month price without the reset.
Step 4: Recalculate for Your Top Five SKUs Using This Template
Here’s the worksheet structure every line in your purchasing ledger should pass through this month:
| Component | Pre-Busan ($/MT) | Post-Busan ($/MT) | Delta | Source of change |
|---|---|---|---|---|
| FOB origin | A | A’ | A’ minus A | Supplier quote |
| Ocean freight | B | B’ | B’ minus B | Carrier contract |
| Marine insurance | C | C’ | C’ minus C | Insurer |
| IEEPA fentanyl | 0.20 x CIF | 0.10 x CIF | 0.10 x CIF saved | Tariff reduction |
| IEEPA reciprocal | 0.10 x CIF | 0.10 x CIF | 0 | Unchanged |
| Section 301 | rate x CIF | rate x CIF | 0 | Unchanged |
| MPF + HMF | ~0.47% x CIF | ~0.47% x CIF | 0 | Unchanged |
| Inland USA | D | D’ | D’ minus D | Trucking provider |
| Total landed | Sum | Sum | Delta | Net recapture |
Fill this out for your top five. Then rank the SKUs by absolute dollar delta per year. Start your renegotiation with the largest dollar-delta SKU. You have maximum leverage where your supplier has maximum dollar exposure to losing your business.
Step 5: Don’t Forget the Second-Order Effects
Two things move that aren’t on the tariff line but will show up in your Q1 2026 cost stack.
First, ocean freight. With China resuming US soybean purchases, the COSCO, CMA CGM and OOCL backhaul math on Shanghai-LA/Long Beach improves materially. Drewry’s World Container Index was already softening pre-Busan; post-Busan we’re watching an additional $150 to $300 per FEU come out over 60 days. If your 2026 carrier contracts are still unsigned, this is the week to push. Reference the backhaul rebalance in writing.
Second, marine insurance. Underwriters at Lloyd’s priced geopolitical risk into trans-Pacific chemical cargo through most of 2025 at 0.35% to 0.45% of CIF value. With a 12-month stability framework nominally in place, expect quotes to soften toward 0.28% to 0.35%. Small line item, but on large cargoes it adds up. Re-solicit your marine cover before year end.
Step 6: Lock Your Broker Into the Rewrite
Call your broker this week. Not an email. An actual call. Three asks:
One, a line-by-line review of entries filed between August and November to identify any HTSUS codes that fell into the 178 extended Section 301 exclusions. Every exclusion-eligible line that paid duty at the Section 301 rate is a Post Summary Correction opportunity inside the 314-day window. We’ve seen refunds of 2% to 5% of duty paid on mid-size importer books.
Two, written confirmation of the IEEPA 10% fentanyl rate applied to all entries from November 10 forward. Filers have been known to drag on updating duty rate tables. Check it.
Three, a standing process on any new SKU you onboard in Q1 2026. Run the HTSUS against the exclusion list before the first cargo lands. The worst time to discover exclusion eligibility is six months after you’ve paid duty on 15 cargoes.
The One-Page Action List for Your Tuesday Morning Meeting
Walk into the room with this:
- List of your top 10 SKUs by annual Chinese spend
- Latest FOB quote for each, with date received
- HTSUS code and Section 301 list for each
- Pre-Busan and post-Busan landed cost per MT for each (use the template above)
- Dollar delta per year across the portfolio
Assign one person to renegotiate the top five SKUs with the supplier this week. Assign the broker the exclusion audit. Assign the carrier contract refresh to your logistics lead. Set a target of capturing at least 70% of the Penn Wharton-modelled tariff delta on your post-Busan landed cost sheet within 60 days. Anything less means your supplier kept the money.
If you want a second set of eyes on the recalculation before you sit down with Wanhua, Sinopec or your speciality supplier on Thursday, that’s what we do. Bring the top five SKUs and we’ll pressure-test the FOB pushback together.